New Regulation of European Financial Institution Compensation Structures Is Proceeding Apace

Since April 20, three initiatives relating to the regulation of compensation arrangements of financial institutions in Europe have been released, including a statement of compensation principles, a recommendation for compensation structures in the financial services sector and a working paper related to modifications of the EU Capital Requirements Directive regarding compensation policies. These initiatives could bring far-reaching changes in compensation practices, including required changes to the proportion of fixed to variable compensation that are intended to dampen incentives for risk-taking by financial institutions.

The memorandum outlines the three recent initiatives. Please feel free to contact any of your regular contacts at the firm or any of the partners and counsel listed under Banking and Financial Institutions, Corporate Governance or Employee Benefits on this website if you have any questions.